Sunday, March 28, 2010

I was online recently and came across the site Woot! which is an interesting internet retail site. Every day, they offer one item for sale, and then sell that item until they are sold out. The next day, they sell something else. It is an interesting retail model, to say the least. And apparently one that is pretty profitable as well.

Are these bargains? Maybe. The problem with the Woot! site is that if you become a fan of the site, you are going there to shop, not to make a purchase.

What's the difference? If you are making a purchase of an item, you carefully determine a need for the item, then shop around to compare prices and features, select the product you want, and them make a strategic purchase.

The Woot! site, like most "shopping" venues, (malls, shopping channels, SkyMall catalog, etc.) reverse the process. They offer a product, and then you decide you need it. The step of determining real need, comparison shopping of prices and features, and strategic buying are not collapsed, they are avoided. They present a product and you impulse buy it.

They are pretty up front about this, too, in a humorous way. Their purchase button says "I Want One!" which is sort of a nod to the impulse purchase aspect of their site. Their blog portion has some more examples of their humor as well, such as their "Holy Crap Commandments":

THE HOLY CRAP COMMANDMENTS v2.0:

I. Thou shalt expect nothing beyond one bag of some kind and your chosen quantity of crappy items (which should be THREE).

II. Thou shalt not whine and complain when some people's crap turns out to be nicer than yours.

III. Thou shalt take a moment to consider whether you might be better off just not buying this crap.

IV. Thou shalt not order just one crap and blame it on anything but your own inattention.

V. To paraphrase Stephen Stills, shalt thou not get the crap you want, want the crap you get.

I have to hand it to them, at least they are up-front about compulsive shopping. Here's our crap, you wanna buy it? Great. Stop Whining if you don't like it.

No. Well, not really. If you buy something you don't end up liking or you have what marketing people call "buyer's remorse," sell it on eBay. It's likely you'll make money doing this and save everyone a hassle. If the item doesn't work, find out what you're doing wrong. Yes, we know you think the item is bad, but it's probably your fault. Google your problem, or come back to that product discussion in our community and ask other people if they know. Try to call the manufacturer and ask if they know. If you give up and must return it to us, then follow on to the next FAQ entry.

That is pretty funny! Honesty like this is hard to come by. Most of what they sell is what people euphemistically call "consumer electronics" and what I call junk. You know, some box of junk with a wall-pack transformer, a packet of silica desiccant, and a warranty card, along with an owner's manual that opens with "Congratulations on your purchase of our piece of junk! It is sure to change your life forever!"

Or, if the item was made in China, as they increasingly are, it will be printed on that slick melamine-laced paper in an odd narrow font, and say "Conglatulations Comrade! You buy junky product! Make much happy! Happy Happy!"

But that would be racist to say that.

But that is the problem with Woot! and consumer electronics in general. The promise of these "toys" is that they will change your life forever, and for the better. You will, from that day forward, look at your life as having two parts; the dull dark period before you purchased a Roomba on Woot! and the enlightened period afterwords, when the angels sang, the heavens opened up, and you finally managed to lose that extra 10 lbs.

But after unpacking countless consumer electronics over the years, tossing the warranty cards (just an invitation for spam and junk mail anyway) and unwrapping those wire ties on yet another wall-pack transformer, I can honestly say that 99% of this junk is just utter crap I could live without. And I'm an Electrical Engineer, too.

I used to buy junk like this from a catalog called Damark. Damark had some great deals, at times, and just junk at others. On the whole, I think I broke even. I bought some phones at Damark for half the cost at the local office supply store. I bought a phone system from them as well. A lot of other stuff was not up to snuff, or was clearly returned merchandise. But the main problem was, (and is) that by getting the catalog, I would end up "shopping" for things I didn't need, based on price, rather than on actual need.

So I would look at the catalog and think, "Gee, that robotic dog looks pretty cool, and only $59.95!" But of course, it was a returned robotic dog and the reason why it was returned was that it was a total POS.

OK, so I didn't buy a robotic dog (I am not THAT stupid) but you get the idea. You read these catalogs and suddenly think you can't live without the product, particularly at the low, low price mentioned. And before long you are buying more and more of this junk, overpaying for it and cluttering up your life and maxing out your credit card.

And I am not picking on DAMARK. Yes, they have some good bargains. They also have stuff you don't need or want. If you read the catalogs, you'll end up buying both.

The best thing to do is to avoid catalogs. I throw them away when I get them now. If you pick up a catalog, chances are, you'll read it and start to think about things you want to buy. Not reading the catalogs (or going on websites like Woot! or watching home shopping channels) is the best way to limit spending on unnecessary garbage.

So while I think Woot! is an interesting concept, I don't think I'll be logging on every day to check it out. The odds that they will have, on a particular day, some item I want or need, is slim. It is far more likely I would end up impulse-purchasing something I didn't need, and end up with more junk cluttering up my life.

Note: I checked a few "bargains" on Woot! over a two-week period, and was not impressed. For example, this laptop was selling for $499.95 plus $5 shipping. Not a bad price, but the local Staples, Wal-Mart and BJ's Wholesale have the same deal without paying for shipping. Plus, the unit is "re-manufactured" meaning it was defective or someone returned it, and God only knows if it will work for you, or whether it will outlast the 90-day warranty. A laptop for $500 is the norm these days, not some screaming bargain. A re-manufactured laptop should be at least $100 cheaper.

I suspect some of the other merchandise on Woot! is about the same in "value". But since you are not comparison shopping (just plain old shopping) you are not going to notice that the $99 GPS is really only an average price, instead of the screaming bargain they claim it is. The humorous stories on the site are funny, but they obscure the nature of the underlying bargain, or lack thereof.

Saturday, March 27, 2010

It is fun to sell things on eBay, and profitable, too, if you know the ropes.

It is that time of year again. I decided to clean out a closet and found a bunch of things that I could not bear to throw away. So I sold them on eBay and made over $700. Actually, I made over $30,000, as I sold my boat on eBay this Spring. If you want something to go away in 7 days, put it on eBay with a no reserve price.

Now granted, when you factor in shipping costs, eBay costs, PayPal costs, and the hassle of packaging things, maybe you don't make a ton of money on this stuff. But $5 here, $10 there, maybe $20 somewhere else, it all adds up. Pretty soon, you are looking at putting a $500 dent in your credit card balance.

The resistance many people have to selling things on eBay, or at garage sales, is that they are convinced that their "stuff" is worth millions of dollars when in fact it may be worth a few dollars. If you have "stuff" and you aren't using it, get rid of it. Even if you find out later on you needed it, chances are, you can buy back the same or a similar thing from eBay.

In this way, eBay acts like a virtual storage closet or pawn shop or even equipment rental store. You turn in merchandise you don't need and get money for it. You get back in return other merchandise and pay money for it. The beauty of it, is that you don't have to keep things on the premise that "someday I might need that". Just sell it to someone on eBay and if you ever need it back, it will be there, for sale by someone else.

This time around I liquidated my coin collection. I am not a coin collector and got into it by buying mint proof sets. It was sort of fun, but since I did not have a place to display the coins, it quickly became boring. And let's fact it, looking at coins is boring. And once you start a collection, you have to keep going and going. I wanted to collect all the 50-state quarters. But that means buying the coins every year. Then, they start up with presidential dollars. What's next? It is effective marketing on their part, but I found I was getting less and less enjoyment from it. Better to sell the coins to someone else trying to complete their set and move on.

I also had a number of components from my old alarm system from my old house. Alarm systems are of little use in preventing real crime (as is owning a gun) and I never got around to installing the alarm in my new house. So after sitting for a few years in a closet, I sold the components on eBay. Surprisingly, there was a strong demand for these, as many folks with older alarm systems are looking for these components to keep their older systems working.

I had some old radios that I hated to throw out. Those are still listed, but I think one might sell.

I've learned a few more things about selling on eBay since last year. See my previous article for more advice about selling on eBay, particularly the frauds and cons to watch out for.

One thing I learned was to use the re-listing feature. Sometimes something doesn't sell because it is overpriced. Other times merely because the person who would have wanted the item just didn't see it during that 7-day window. You can re-list for free in many cases, or for a nominal fee. If you continually re-list an item, sometimes it sells. You can also adjust the price of an item downward, when you re-list and it may sell at the lower price.

In the past, if an item didn't sell, I tended to "give up" on the item, rather than re-list. Now I am more aggressive about re-listing, as it only takes a click or two, and it gets things sold.

We've also used eBay to but items we wanted and saw in stores. For example, we wanted a back massager, a $120 item in the store. I found a new one on eBay for $75, including shipping. By waiting a few days, we saved $45. Buying online is one way of avoiding the impulse purchase and also a good way of making sure you are price shopping.

The summer I plan on selling more items on eBay, including my antique tractor (which we bought on eBay five years ago). We are no longer mowing five acres of lawn, so we aren't using it. And if you aren't using it, why keep it around? It is as simple as that.

Thursday, March 25, 2010

Brand new, this car cost over $40,000. I paid $16,500 for it, and it is now worth maybe $7000 on a good day. Yet many people would have traded in this car long ago, for a new $40,000 car. Does that make any sense, financially? No.

NOTE: I found this article on my hard drive recently. I had started drafting it, and never finished it. Much of the material in the article ended up in other postings on this blog. But here is the original article, which has some good points as well.

CAR BUYING TIPS

HOW TO BUY A RIDE WITHOUT GETTING STUNG

For many folks, buying a car is one of the biggest decisions they make in life – and one they make on a regular basis. Many consumer magazines will say idiotic things like “a car is your second biggest investment, next to your home”. But a car is not an investment, it is a depreciating asset – an expense. And it is one of the largest expenses most people have, and one that they often approach in a very poor manner.

Most folks don’t plan the process very well, and as a result, end up paying too much for a car, and often end up squandering a large portion of their wealth on automobiles – unnecessarily. I have met many retirees who have used up their retirement savings and are forced to live on Social Security – which is not easy! But during their earning years, they bought or leased new cars every 2-3 years. If you want to know “where all the money went”, there’s a hint right there.

1. NEVER BUY A BRAND NEW CAR

The best piece of advice is never, ever, buy a brand new car, period. To many people, this advice makes no sense. After all, everyone buys new cars, right? All my neighbors get brand new cars every few years. It can’t be a wrong thing to do, can it? Can so many people be so wrong?

The answer is, YES, it certainly CAN be wrong and certainly IS. It is true that we are bombarded daily with advertisements for new cars. Television in particular is clogged with ads for cars. Newspapers and magazines could not survive without car ads. The pressure to buy a new car is intense. But it makes no financial sense whatsoever. Can so many people be so wrong? Yes, they can. One of the first steps towards financial independence is to realize that “following the herd” is probably the worst way to make or conserve money. For the most part, the bulk of humanity act like lemmings – racing off the cliff at the highest speed possible.

It is well documented, and you probably already know, that a new car depreciates about 5-20% the moment you drive it off the showroom floor, depending upon make and model. If you buy a brand new car and try to sell it the next day, you can expect to lose thousands of dollars in the transaction. So what does this tell us about the real, inherent value of a new car? The answer is simple – a new car is typically overpriced by 5-20% of what the “market” truly believes the product to be worth.

So why do people pay too much for new cars? Because a new car dealership has salesmen and a well-engineered system to pressure you into paying too much. Buying a new car is a chore and a nightmare for many people simply because you cannot win in the process. Salesmen get you into the showroom, and they won’t let you go – often for hours at a time – until they have “sold’ you a car.

Of course, everyone thinks they have the savvy and know-how to beat the system. The truth is, however, few of us can really come out ahead in a new car transaction – even if we can beat the phony financing scams, come-on pricing, aftermarket add-ons, and other commonplace rip-offs. The reality is, you aren’t as smart as you think you are – chance are, you’ll get fleeced.

Men are probably the worst at this. My neighbor went to a new car dealer on a weekend, with his children in tow (two big mistakes right there) to buy a convertible. Eight hours later, he drove home in his new station wagon. He did not buy a new car, per se, so much as he was sold one. And there is a difference!

And even assuming a best-case scenario – where you pay a fair “new car” price for the car, you still come out behind. As noted above, your car will be worth substantially less than what you paid for it the moment you purchase it. Even if you win, you still lose.

So, if you are looking for tips and hints on how to “beat the dealer”, look elsewhere. Because frankly, it really can’t be done and the effort is not worthwhile. In a best-case scenario, you’ll still end up making a horribly bad financial decision. As we shall see below, the best deals are not in new cars, but in carefully kept used cars. And the best deals are never, ever at a dealer. So just walk away from dealers, period.

(Sites like www.edmunds.com have great data on dealer pricing and what to realistically expect to pay. The internet has made “on-line” sales a good strategy. Credit Union pricing clubs are also an option. But I have seen all of these strategies backfire once you set foot in the dealership. Internet and fixed pricing deals can be altered by crafty salesmen – and you’ll have to fight just to pay a reasonable price. And as noted, you still end up losing 5-20% the moment you drive away).

2. WHAT ABOUT LEASING?

If buying a brand new car is a bad financial decision, leasing a new car is like putting a gun to your head and puling the trigger. Again, I can hear you saying already, “But all my friends are doing it! It has to be a good deal!” And of course, dealers will try to sell you on leasing by saying very silly things like “you are only buying the part of the car you want” or “it will lower your monthly cash flow”.

Buying a brand new car isn’t quite the most expensive way to own a car. Leasing a brand new car is. Not only are you taking the 5-20% initial new car hit mentioned above, you are also getting socked on interest and price as well.

You see, leasing a car is not like renting a car. You are, in effect, buying the car. You pay the taxes on it, insure it, and are responsible for its care and upkeep. The lease agreement is merely an agreement that the dealer will buy back the car at the end of the lease, provided certain conditions are met.

In any financial transaction, the more complicated you can make the transaction, the easier it is to conceal the actual terms – terms detrimental to your interests. In the case of the lease, these terms are the PRICE of the car, and the INTEREST RATE (sometimes called the “Cost of Money”). Many lessees never see these numbers, or if they do see them, are only peripherally aware of them. They focus on MONTHLY PAYMENT and not the overall cost of the transaction.

And not surprisingly, many lessees end up paying more for the car then they would have had they negotiated a straight cash sale deal. The reason is simple – they don’t think they are buying a car, so they focus only on monthly payment. Similarly, since they don’t think they are financing a car, they don’t worry about interest rate. But when you lease a car, you are borrowing money from the bank, at a predetermined rate.

Many lessees end up paying near or even over list price for a car – and paying interest rates several points higher than regular bank rates.

Still think leasing is a good deal?

If you buy and actually OWN a car (i.e., pay cash for it, or pay off the loan), you can drive it for a good long time and have a very economical means of transportation. However, if you are constantly buying and selling cars, particularly new cars, you’ll end up spending (wasting) a lot of money on that new car depreciation. Leasing just cuts to the chase – you pay the top dollar for that depreciation.

So while a car payment might be more per month, at the end of a three-year loan (as opposed to a lease) you own the car outright, and if you can drive it for a few more years, you come out far ahead. For the price of leasing a brand new car, you can make payments on a used one – and own the car outright when the payments are done.

The other problem with leases is that people pay far more than they think they are, and at the end of the lease, hidden charges can really add up. Dealers use come-on pricing (“$299 a month!) to get you into the showroom, and then tell you that, sorry, due to your credit rating, you don’t qualify for that price. And of course, there might be a $3000 (or $2999) up-front payment or fees. And at the end of the lease, you have to pay “excess wear” fees when you turn the car in. Oftentimes, these end of lease fees are “forgiven” if you lease another new car (in reality, they are folded into the cost of the new lease).

One of the most egregious practices in leasing today is the limited mileage limitations. Many, if not most come-on lease agreements limit annual mileage to 10,000-12,000 miles per year. The average American drives 15,000 miles a year, which means for a three year lease, the typical buyer can end up with 15,000 in excess miles, which may incur “excess wear” charges in the thousands ($3750 at 0.25 per mile). And, if the car is scratched, dented, or otherwise not in “pristine” condition, you may be socked with other charges in addition to mileage charges. And God help you if you wreck the car.

I’ve seen folks park a leased car for months at a time to keep the mileage from accumulating. To me, this makes no sense, as what is the point of paying for a car you can’t drive?

And if you should be forced into a situation where you have to “turn in the car early” you will be totally hosed. If you decide to end the lease early, you basically are saying to the dealer “Tell me what to pay and I’ll pay it”. In many cases, lessees have to pay thousands in fees (often equal to the remaining lease payments) for the privilege of relinquishing the car. Leasing means you have no control over the ownership of your own assets.

And if the car has excess wear, or is damaged and you are facing hefty turn-in fees, buying the car outright at that point can also be expensive. Again, you are throwing yourself at the mercy of the dealer, and basically whatever price they quote you, you have to pay.

In short, leasing is a raw deal. A lot of people get “stuck” on the leasing merry-go-round, too. At the end of the lease, the excess wear charges are so high, that they are coerced into leasing another car to fold in the costs. Of course, this means the end of the next lease will be even more expensive. Like a drug user, the lessee cannot stop his habit.

(Note: Many new car buyers fall into the same trap, ending up “upside down” on new car, paying high interest rates and high insurance costs. This is a particularly deadly trap for young people, who are easily enticed by the idea of having a fancy new car).

And this is a shame, too. I’ve seen many people with well-paying jobs squander a lifetime of work by spending money on cars – while failing to fully fund their 401(k) plans or save for retirement. Leasing may be a fun way to have a fancy car you really can’t afford, but eventually you will have to pay for that car – perhaps when you are 65 years old and facing a very bleak retirement.

3. LATE MODEL USED CARS – THE BEST BARGAIN

The best bargain in the car business is a late model used car – 1-3 years old, preferably, that has relatively low miles and was well taken care of. Many folks are afraid to buy used cars for a number of reasons. And new car dealers prey upon these fears – these myths – to make buying a new car seem like a reasonable proposition:

1.A New Car is More Reliable: FALSE. Many folks are paranoid about “breaking down somewhere” and this is very true with women in particular, who are often regaled with stories about some poor soul whose car breaks down, and is kidnapped, robbed, and raped. The truth is, you’ll spend more time in a dealer with warranty repairs with a brand new car than with a well-maintained LATE MODEL used car. Many of us have horrible memories of the older “junkers” that we drove as college students (and didn’t take care of) and thus have a negative image of used cars in general. But a car with only 20,000-50,000 miles on the clock should give many years of reliable service, provided it is well taken care of (more about that later).

2. You’ll Get Ripped Off Buying Used Car: FALSE, provided you do your homework. Yes, it is true that you can get ripped off buying a used car, but it is also true that you ALWAYS get ‘ripped off’ buying a new car. While you cannot do anything to eliminate the huge depreciation hit on a new car, you can manage the risks of used car buying. Doing the research first, having the car checked over, and staying away from “fright pigs” will largely eliminate most risk. Staying away from used car dealers, in particular, is a good idea.

3.Used Cars Can Leave You With Huge Repair Bills: FALSE. One of the most irrational fears I see in car ownership is the fear of the staggering repair bill. For many people, Car repairs are a mystery and come and go like the weather without rhyme or reason. Again, a well-maintained car should go well over 100,000 miles without major repair. Most late model used cars are still under warranty for 50,000 miles or more. And most repairs out of warranty are fairly inexpensive compared to the cost of depreciation or insurance on a new car. Other than a catastrophic engine or transmission failure (both very rare, even in the worst made cars) most car repairs will total in the hundreds of dollars, not in the thousands.

In short, while the PERCEPTION in society is that buying a used car is risky business and could possibly bankrupt you. The REALITY is, buying or leasing a string of brand new cars is a guaranteed route to middle-class poverty.

4. MIDDLE CLASS POVERTY

“Hey,” you say, “I can afford to lease a new car every two years – I’m making good money!” If this were true, you likely would not be reading this article. If you won the lottery or are Bill Gates, then sure, you can afford a new car every week. But folks that rich are few and far between.

The reality is, for many us plain folks making “only” $100,000 a year or so, there is never a point where you can have too much spare money lying around. A lot of folks in this country are living in what I call middle-class poverty. They have high incomes and also high expenses. They make lots of money, but never seem to get ahead or save anything.

And the road to middle class poverty is paved with car payments.

A good friend of mine bought a $300,000 boat the other day. I said to him “Wow, that’s kind of an expensive boat” which it was. “Can you afford that?” I asked. He replied, “Well, the bank says I can”.

Wrong answer.

Banks are in business to loan money – and they make money loaning money. So they care only if you can make the monthly payments and not about your long-term financial future. If you are not maxing out your 401(k) contribution and have three month’s salary in savings, then you really have no business buying or leasing brand new luxury cars.

Now some folks have told me “Well, buddy, that ain’t your business, is it?” Well, you see, it really is. We are facing a catastrophe in the near future in this country, as a large number of “baby boomers” are living large on borrowed money, home equity loans, and car leases. They are careening toward retirement with no plan in place other than “I guess I’ll work a few years longer” - which may not always be an option (See my article “laid off!”).

And you can guess what these baby boomers will do when they retire – petition the government to raise taxes to increase social spending to support them. Unfortunately, the well will be pretty much dry by then. Social Security is already headed for a crises before the boomers retire.

It IS possible to live a different kind of lifestyle – based on real wealth, not on spending. Many folks confuse spending with wealth, thinking that if you are spending a lot of money, it must mean you are wealthy. Wealth is defined not by consumption, but by how much money you retain at the end of the day.

What is sad to me, is that for anyone making a decent living in this country, you can save your money, be financially independent, and live a comfortable life without worry about losing a job, having to work, and paying mountains of bills. Unfortunately, most people do not CHOOSE such a life, and instead willingly chain themselves to a treadmill of more and more work coupled to every-increasing monthly payments – and all in return for some shiny objects in the driveway, a few fancy clothes, and some electronic gadgets.

The story goes that the Indians sold Manhattan to the white man for $24 worth of beads and trinkets. Not much changes in 500 years, does it?

5. The Best Used Car – Is It In Your Driveway?

Before you go shopping for a car, you have to ask yourself first whether the best used car out there isn’t already sitting in your driveway. If you have a well-maintained car, that is paid for, chances are, it may give you years of reliable service, at a relatively modest cost.

Again, many people are afraid of “repairs” to older cars, and will dump a perfectly serviceable car after a repair bill for a few hundred dollars pops up. They ditch a perfectly good car because of a $500 alternator replacement, only to sign on for four years of car payments at $500 per MONTH. Sound ridiculous? Well, it is. And it happens all the time.

Many repair places offer “lifetime warranty” on repairs or repair parts (mufflers, for example). The reason they can do this is simple – statistically, most used car owners tend to sell their cars every 3-5 years, and usually after a repair is made. The cost of repair ends up being the impetus to sell – with the specter of other repairs on the horizon.

Modern automobiles, however, are much more reliable than their counterparts of even 10 years ago. Today, even an American car can expect to see 150,000 miles or more on the odometer (twice what we expected back in 1965!). Japanese and other makes may go a quarter-million miles or more – with proper care.

Many older people still remember car reliability from the “bad old days” and treat their cars accordingly. I have a friend with a beautiful Toyota truck, with only 68,000 miles on the clock. This is a vehicle that can easily be driven 200,0000 miles or more with minimal repairs. However, he is convinced that any car with over 50,000 miles on it is “unreliable” and thus plans on unloading the car soon. As a result, he never took very good care of it, washed it, waxed it, or kept it garaged. His short life expectancy for the vehicle became a self-fulfilling prophecy.

There is an end game to used cars, of course, and throwing thousands of dollars at a used car is often a bad idea. A good rule of thumb to follow is that when a repair cost exceeds the book value of the car, it is time to throw in the towel. Sign the title over to the mechanic or sell the car for scrap.

Thus, if your car has 175,000 miles on it, and a book value of only $5000, and it needs a new transmission or new engine, chances are, it is time to call it a day. But on the other hand, throwing away a 125,000 mile car just because it needs a new set of tires is just being silly. Tires are a wear item, and you will wear out the equivalent amount of rubber on a brand new car. So yes, know when to quit, but no, don't toss in the towel too early.

6. Selecting and Searching for a Used Car

If you decide the junker in your driveway really has to go, there is a scientific way to replace the car. It involves some research and legwork, but fortunately for you, we have the Internet to help out with a lot of these chores.

Here are some tips:

1. Don't be in a hurry: A salesman loves a person who comes in and says "I need to buy a car today". Forget having any leverage or advantage! They make tens of millions of cars in this country each year, so don't worry about them running out. There are 300 million people in this country, and over 320 million cars - more than one per person! So when the salesman says "They didn't make many in THIS color!", wait a few minutes - another one pops off the line about every 4 minutes or so... Don't be rushed. There are plenty out there....

2. Pick one make/model/year range to shop for. Comparing Toyota Camrys to Honda Accords to a Pontiac G6 is hard, as the models vary in price and condition and you are comparing apples to oranges. If you can fixated on ONE particular car and option package(s) and small range of years, it makes it easier to look at several and get a feel for what they are worth. Consumer Reports has useful comparison information on different models which is of some use. If you like Toyotas, (nd they are good machines. Very reliable.), pick a particular model to shop for, and it will make it a lot easier. Don't be like my neighbor in Virginia, who went shopping for a Volvo convertible, and came home with a station wagon (!!).

3. RESEARCH. Do some price researching on www.edmunds.com (It is hard to find, but look for the "True Market Value" Or TMV link on their site). You can price out a used (or new) car, option by option, even compensating for color choice and area code. There are also 5 levels of condition value. www.kbb.com and www.nadaguides.com are also useful, but as dealer-generated guides, I find their data a little more self-serving. But visit all three, print out the data, and at least you'll know what to expect in terms of pricing (and what is a "fair" and reasonable price). Expect to pay a fair price, too. Too many folks obsesss over a "bargain" - which rarely happens.

4. RESEARCH some more. Go online to a usergroup for owners of that car. A google search should turn up a Toyota owners group, for example. Visit the discussion group and read some of the postings about common problems for that make and model (so you know what to look for). Ask a question, if necessary. Someone will bend your ear on things to look for, what problems are common to particular models, what to avoid, etc. Some years and options are more troublesome that others. In every make (even Hondas and Toyotas) there are "dog" years and dog cars, that are nto a reliable as most of the others. If you can spot this, it can save you a lot of trouble. Also, you can find out what common service problems and recalls to look for. A BMW X5, for example, goes through CV joints, so if this has been replaced by the previous owner, it is a plus...

5. RESEARCH SOME MORE: Look at several sources for listings of cars for sale. www.autotrader.com is a one place to look (they also publish a "hard" version of AUTOTRADER available at your local 7-11). Local classifieds are usually the worst - they are flooded with dealer listings and the selection is very limited, to say the least. But look there, too. Look anywhere! Even eBay can be a place to look - but is not for the faint of heart or inexperienced. And I would never buy a car on-line without looking at it in person (OK, well, there's my Jeep, but there's my case in point!). Be illing to drive a few hours to find the right car - limiting yourself to the immediate area means limited choices.

6. Avoid used car dealers most used car dealers get "fright pig" cars from auto auctions, which are the cars the new car dealers take in trade and then pass by, as they cannot sell them as "certified" used cars. The 30 day warranty provided is usually next to worthless. Some newer franchises like CARMAX are not as bad as the old shafty used car dealers of old. But they do have a profit margin to maintain as well.

7. New car dealers: These charge top dollar, but many offer extended warranties on their "certifed" used cars. Not my cup of tea, personally. Many new car warranties run for 4-5 years or more - and are transferable, so if you are looking at a late model car, it may be under warranty anyway, no matter where you buy it. Frankly, the surcharge many new car dealers charge for these extended warranties is just not worth it. Most dealers mark up a used car several thousand dollars. This is more than enough to pay for a new engine! So the extra “piece of mind” of an extended warranty is really illusory. You are paying top dollar for this “security”.

8. Individuals: The BEST BET is to find a well-maintained car from a reasonable individual. Look for a one-owner car, garage kept, with all service records. It should be clean and immaculate. You may have better bargaining power with an individual, and they don't have a dealer overhead to maintain. Cars like that are out there, but you do have to look. Since most people buy through dealers, there are more of these cars available than you'd think. A real babied car can be a joy to own. A mystery machine, off-lease at Akbar's shiny used car lot (with 20,000 mile old changes) can be a nightmare. There are also cars for sale by individuals which are neglected, abused, and overpriced - these "dreamers" list their cars for months, hoping someone will bite. It amazes me, but someone ends up buying these nightmares, eventually. It goes without saying to avoid nasty and difficult or pushy people. Use your gut instinct. If they seem like bad people, don't buy a car from them...

9. RESEARCH YET MORE: You can find LIMITED car data on www.carfax.com. Sign up for the "unlimited" 30 day service if you are car shopping. It does not cost that much. You can type in a VIN number, and it will pull up some (but not all) data on the car - whether it was leased, commercial vehicle, in a wreck, etc. A "clean" Carfax report is not a guarantee of anything, but a dirty record can tip you off to a problem car. Run the Carfax report BEFORE you drive out to look at the car. If the seller won't read you the VIN number, well, that tells you about them....

10. DO MORE RESEARCH: Have your local trusted mechanic inspect the car. Once you have narrowed it down to a particular car, have your local mechanic check it over (Cost, usually an hour shop time). If the owner balks, well, you know you've got trouble. A good mechanic can spot potential repair problems and/or accident damage. Repairs aren't necessarily a deal-killer, but they can be useful as a negotiating tool.

As you can see, it does take some RESEARCH to educate yourself in this process. Sticking to one make and model car helps a lot, as it cuts down on the amount of research you need to do, and also makes it easier to compare cars.

7. FINANCING – PAY CASH

The most liberating thing in the world is to own a car with a title that says “no liens”. You can save a bundle of money this way. And chances are – you CAN afford to pay cash for a car. Owning a car outright means you save a lot of dough:

1.You can raise the deductible on your insurance, and cut your premiums dramatically. You can even drop some coverage entirely, if the car is old enough.

2.You pay no interest on car loans – interest that could cost thousands of dollars.

Now the economists out there will point out that tying up money in a depreciating asset like a car does have an “opportunity cost”. You could be making money in the Stock Market on that money! This is true. However, generally, what you make in the stock market or in a bank account rarely exceeds the interest rates on car loans. And moreover, if you are borrowing money to pay for a car, chances are, you don’t have all that “extra” cash lying about to invest in stocks. Paying cash for a car means not paying 8% per month on loan payments, and that is the same as earning 8% interest – which is not a bad return these days.

If you have to borrow money, be smart about it. Dealers like to use come-ons like 0% financing or low finance rates to get you to buy a new car. The joke of course, is that only people with absolutely perfect credit scores qualify for this financing. And of course, if you take the low or zero interest financing, you forfeit any rebates or other discounts – and it is harder to negotiate on price. So forget about these con-jobs, they really save you no money at all.

One of the best bargaining advantages in the used car business is having cash. Individuals selling their cars don’t have the advantages of car dealers – offering financing packages and making it a smooth deal. So buyers with cash in hand have the upper hand – which is why “private sale” prices on used cars are such a bargain.

If you don’t have the cash, at least borrow smart. Your local credit union can pre-approve you for a loan, or quickly approve a loan for a used car. While paying 5-8% may seem like a lot more than the “free” financing down at the car dealer, bear in mind that the 0% financing gimmick is just that – you are not getting anything for free at all. Once you have a loan approved, you can negotiate price as a straight cash deal.

An even better alternative is to use a home equity loan. If you qualify and if you have enough equity in your home, the interest on such a loan MAY be tax deductible. But, beware of excess fees in such deals, and keep a close eye on the interest rates. One advantage of a home equity loan is that since the loan is not tied to the car, you own the car outright, and thus don’t have to pay expensive insurance premiums.

As I noted before, almost anyone can afford to pay cash for a car – and I’m sure you don’t believe me still. The key is in deciding how much car you can REALLY afford – not how much you think you deserve. Most people select their car based upon what their neighbors are driving – and what they think will impress the neighbors. Yes, admit it, a huge portion of your ego is tied up in what you drive. Overcoming this obstacle can be a big first step in true financial freedom. Defining yourself by what is parked in your driveway is awfully shallow – and short-sighted.

It may make more sense to buy LESS car than you think you can afford, take the money you saved not making car payments, and put it in the bank. By the time you are ready for a new car, you’ll have the cash to buy the ride you really want.

8. AN EXAMPLE OF HOW TO SHOP

My friend Susan asked me to help her look for a car. She is a very bright person, but doesn't know a lot about cars. But, she is the type that will go to the library and check out a book when she doesn't know about a topic. She figured out how much she wanted to spend (in cash). After reading a lot of back issues of Consumer Reports, she decided to look at the Chevy/Geo PRIZM, as it is basically a Toyota Corolla (built on the same assembly line at the NUUMI plant in Fremont California) - but often sells for much less than the Toyota version, due to the relative reputations of the two marques (smart girl, that Susan!).

We looked at about 5-7 Geo PRIZMS (all about the same model year), on used car lots, dealer lots, and from individuals. One individual had a car that was dirty, had stains on the seats, a couple of dents, lots of scratches, and the ABS light on ("You can fix that" he offered helpfully). Surprisingly, it was the highest priced car of the bunch (and he would not budge on price). Classic "dreamer". We took a pass.

She finally settled on a car from an individual owner that was immaculate in and out, even the engine. No dents or scratches. The owner had most of the service records, and had recently changed the timing belt, battery and brakes. Having looked at several of these cars, she quickly recognized that this car was a pretty good deal (which would have been hard to tell, if it was the only one we looked at). She had her mechanic check it over, and he gave it a clean bill of health.

She paid $3000 for that car, drove it for 3 years, and sold it for $1500 when she left the country. Not such a bad cost per mile in terms of depreciation. The only repair she had to make was for an alternator ($400).

While you might be looking to spend a lot more than that on a car, the same principles apply:

1.Figure out how much you want to spend (not how much per month)

2.RESEARCH to select a car, and to learn about the car and pricing

3.Shop the same make and model, rather than comparing apples to oranges

4.Don’t panic because the car needs a repair or two

9. INSURANCE

As I noted above, you end up saving a lot of money when you buy a used car, and insurance is one area you can really clean up. For many young people, the dream of owning a shiny new econobox is too temping, and they just have to have one. They end up paying more in insurance premiums than in car payments – a high price to pay for vanity.

But even many said middle-class folks pay far too much for insurance. Again, fear and panic rule the day. Many people are paranoid that their car will be crashed, catch fire, or a tree will fall on it. Who will pay for a replacement?

While it is a good idea to insure assets, over-insuring an asset is a foolish waste of capital. You can afford to pay a $500 or even $1000 deductible should your car be destroyed. Remember, these are events you are hoping DON’T happen – not things you plan for. Going to a higher deductible can cut the cost of insurance in half. Insurance fraud is a big business, and many of those petty claims for nickel and dime stuff really add up. Moreover, going to a higher deductible tells the insurance company that you are less inclined to file a fraudulent claim.

But an even better deal is to ditch collision and comprehensive coverage entirely. A used car depreciates in value fairly quickly. Once it drops below $10,000 in value, it probably is a good idea to drop collision coverage.

"But wait" you say, "what if I wreck my car? Then I'm out $10,000!" Yes, that would be true, but if you are a risk-taker you are more likely to reap rewards. Insuring something as trivial as your car's bodywork is overkill, and let me explain why.

The average person gets into an accident every 11 years. And this is something that you have some control over, too. It is not a total matter of random probability. If you slow down, drive carefully, and drive defensively, you improve the odds you will not be in an accident. So rather than pay a lot of money for insurance, a better plan, with better odds, is to drive more carefully.

Also, not every accident will total out your car. You are more likely to have a "fender bender" that will cost a few hundred dollars to fix than to have an accident that totals the car. And if you are paying for the repairs yourself, you'd be surprised how cheaply they can be made.

And "totaled" means only that repairs exceed the value of the car, or close to it. So for a $5000 car, it does not take a lot of damage to "total" the car out. With a $500 or $1000 deductible, the most you can expect to get is $4000 to $4500. Is that worth spending $500 to $1000 a year?

Insuring a new car is worthwhile, and often mandatory. But collision insurance for an older car - even on in perfect shape, is often a bad bargain.

* * * * * *

I mention car buying and shopping on this blog a lot, as people spend a lot of money on cars - often unnecessarily. You can save a lot of dough in life by buying and keeping a car in a smart way. You can squander tens of thousands of dollars in cash (if not hundreds of thousands) buy buying and keeping them the dumb way. The choice is yours.

In many older cars, people run into mysterious electrical gremlins that cause no end of grief. However, electrical circuitry is not magic, but science. Electromagnetism is magic.

Finding and curing electrical gremlins can be difficult, but if you take a systematic approach, any electrical gremlin can be cured. And taking a proactive approach may prevent such gremlins from coming back.

The biggest problem I see when shade-tree mechanics try to solve electrical problems (or any problem, for that matter) is that they want to isolate the problem to one source, fix that source, and be done with it. Electrical problems can have a host of sources, and multiple sources can contribute to create a "gremlin" problem.

If you attack all of these problems, systematically, you can eliminate electrical problems for good, from any car. Even an MG or a Fiat. You need not live in fear of Lucas Electronics. Any electrical circuit can be made reliable.

The problem with diagnosing these gremlins is that most people look to the least likely sources for trouble first, while pointedly ignoring the most likely sources of trouble. So the average shade-tree mechanic assumes there is "a short somewhere in the wires" (very unlikely) causing his battery to go flat, while assuming the battery itself is good (without testing it). Of course, the most likely cause of a battery going flat is the battery, which is where you should start any electrical gremlin hunt.

You don't need to be an Electrical Engineer to solve most of these problems, either, as most electrical problems in cars are cause by mechanical failure of components. But learning the basics of circuit law and how to use a Volt-Ohm Meter never hurts and can help you immensely in diagnosing circuit problems.

So here is a short list of how to track down and kill electrical gremlins:

1. The Battery: Before starting any hunt, make sure your battery is working properly. Yea, I know, it is only 7 years old. But check anyway. If you are having electrical problems, check the voltage at the battery with the engine off. It should be about 13 volts. Clean and tighten the battery connections. You'd be surprised how a loose connection can cause all sorts of weird problems, and yes, people always discover this last, not first. It never hurts to clean and tighten battery connections, so just do it and stop whining. Apply some type of corrosion inhibitor to the connectors. They make special sprays for this, but any type of dielectric grease may help.

If you are unsure about the battery at all, remove it and have it tested at your local auto parts store, which will do this service for free. If the battery is over 5 years old and in any way marginal, just replace it. Batteries are cheap ($100 or less) and eliminating this as a source of trouble is important. Marginal batteries can do weird things in electrical systems. And of course, they will eventually leave you stranded somewhere.

A note on jump starting: Jump starting causes more problems for amateur mechanics than anything else. The wild swings in system voltage may set off the check engine light (low voltage being one of the CE trip codes) and can cause damage to the car's electronics. So avoid jumping the car whenever possible. That means not jumping a car again and again with a "mysterious battery problem" and instead just breaking down and buying a new battery.

Second, most modern alternators will NOT charge a dead car battery. So if you jump a car, keep it connected to the donor car for a good long time (at least 20 minutes) or connect the car to a battery charger right away. Most modern alternators will overheat and self-destruct if you try to recharge the battery from flat. So a bad battery problem quickly cascades into a blown alternator problem.

Note also that even a brand new battery can be destroyed if allowed to go completely flat several times. So if you leave the lights on overnight, it really damages the battery. Do it several times, and you may find yourself needing a new battery.

2. The Alternator: With the car running, your system voltage should be about 14.5 volts. If is it substantially less than this, chances are, your alternator is shot. Again, your local auto parts store can test the alternator if you are in doubt, including under load, and sometimes while on the car, and again, they may do this for free.

Rebuilt alternators are not too expensive, and there may be a shop in your town that rebuilds and rewinds alternators (these are getting scarcer as more alternators are made in Asia and are disposable). Look in the yellow pages under armature shops, etc.

Yes, you can "rebuild" some alternators yourself. Some have a cartridge that replaces the brushes and voltage regulator in one shot. And you can even break apart the unit and replace bearings and diodes yourself. Once the insulation melts on the windings, however, the unit will need a professional rebuild, or increasingly, be thrown away.

For the cost of a rebuilt or new alternator, however, it is far easier to just replace the unit and return your old one as a "core" and let others do the overhauling.

3. Connectors: Once the charging system (battery and alternator) is found to be sound, you can attack other sources of trouble. But do not do so until you have eliminated items #1 and #2 above. More than half of all electrical problems can be traced to power supply problems, and going after electrical gremlins without checking your power supply (battery and alternator) first is counterproductive.

Light bulbs are the most common failure mode in any electrical circuit, but I presume you know how to locate and change a light bulb. Bear in mind that on some foreign cars, even this pedestrian task can be made esoteric by the odd shapes and wattages of euro-spec bulbs. Suffice it to say that you should use the exact same bulb that is specified for the car, or you may have troubles. And since bulbs are sold in pairs, replace them in pairs, as they do dim over time and if you replace one, the car will have a winky effect, with one tail light brighter than the other. Also, if one bulb fails, the other will not be far behind.

Behind light bulbs, though, electrical connectors are the next most likely failure mode in any electrical circuit. And this is the one area most often overlooked by the average shade tree mechanic.

Which connector? Well, all of them. And in many European cars, this means the ground connections as well.

With the battery disconnected, examine each electrical connector you see on the car. Carefully unplug each (many have tangs and clips or bails that hold them together, do not force or break them). Note if there is a gasket on the connector and be sure to replace it when reassembling.

Look for evidence of corrosion from water or air - dull color, green oxidation, or the like. Clean contacts with an emory board or small piece of fine grit sandpaper. For circuit boards, try gentle pressure from a pencil eraser. Blow out any dust. Apply a layer of dielectric grease (available in tubes, pots, or even pressurized cans, from any auto parts store) to the connector and reassemble.

Many European cars have centralized grounding connectors. A bundle of brown wires may attach to some point on a fender or in the trunk. Look for corrosion on these. Disassemble, clean each contact, and then reassemble, applying a generous layer of dielectric grease.

Many cars use aluminum connectors to save money. When oxidized, these connectors create aluminum oxide, a good insulator. If you have aluminum connectors, cleaning them and applying dielectric grease does wonders for electrical gremlins. Such connectors, when oxidized, can create a 3-5 volt drop or even an open circuit.

Note that many "chronic" electrical component problems are in fact, connector problems. For example, one fellow I met went through three engine computers in his Ford truck. The car would run for a year or so and then quit. The mechanic would replace the engine "brain" and the truck would run, for a year or so.

Most electrical connectors are of the "wipe" variety, so when you plug in a component, the connector wipes down the side of its mating part, scraping off a thin layer of oxidation and making electrical contact. So merely replacing a bad computer "brain" often "fixes" the car. But the problem was not the computer, but merely oxidation on the connector.

Cleaning the connector first often solves the problem, without expensive component repair. Many low voltage and low amperage sensors, such as wheel sensors for ABS systems are particularly prone to this, compounded by the fact that the connectors may be located in the wheel well and subject to road spray.

A standard pencil eraser, by the way, can be used to polish up and clean electrical contacts, particularly flat ones, such as on circuit boards and edge connectors.

Note that the ignition switch on many cars has connectors for a whole host of electrical items in a car. I once spend several hours tracing down electrical problems on a car, only to pull the ignition switch connector last and see it blackened with oxidation and corrosion. The combined amperage flowing through this connector, which was slightly loose, caused a lot of arcing, which in turn built up a layer of insulating oxide, eventually leading to circuit failure.

Fuses are connectors in a way, and modern two-prong fuses often have aluminum connectors that can oxidize readily. On my boat, these corrode with regularity and have to be cleaned nearly every season, and then coated with dielectric grease.

A special note on fuses: It is tempting to put in a higher amperage fuse in a circuit as a "fix" to a fuse blowing constantly. Fuses are designed to protect WIRING by providing a weak point in the circuit that will melt before all others. If you put in a higher amperage fuse, the weak point in the circuit becomes the wiring itself, which, when it melts, can cause a car fire. So if you are blowing fuses in a circuit, don't try the dimestore trick of replacing the fuse with one of a higher value - you'll just cause no end of grief, and possibly burn down your house.

If you own an older car, get in the habit of inspecting such connectors and fuses during your regular maintenance on the car. Clean any that have even the slightest corrosion and also use dielectric grease on all connectors. If you do this as a preventative measure, electrical gremlins will be less likely to pop up down the road, and you won't have to "chase" them later on.

For diagnostic purposes, start with the connector closest to the problem element (tail light, turn signal, whatever) and then follow your way back. Be sure to trace ground wires as well! I had a ground wire problem with a fuel pump on a Fiat once. I turned out that the fuel pump (mounted under the car, admidships) grounded to the left tail light housing. When the car was repainted, the body may did not tighten the tail light housing and the ground for the fuel pump was intermittent.

Ground connections are particularly frustrating as they can be located far away from the component of interest, and if all you do is trace the power wiring, you are missing half the circuit. So check those ground connections as well. European cars in particular seem to be fond of grounding several items at one point, which results in odd things happening when the ground goes bad.

For example, in the Fiat example above, since the fuel pump grounded to the tail light, when I applied the brakes or turned on the running lights, it applied 12V to the floating ground, resulting in a zero voltage drop across the fuel pump, shutting it down. While this may seem like "magic" to the uninformed, it is a simple Kirchoff circuit law analysis.

4. Switches and Relays: Switches wear out, just like light bulbs. And after connectors, they are the next most probable source of problems. Every switch, when switching a live load, has a moment when the contacts are not quite together, where an arc may jump between the two contacts. This arcing produces oxidation, which as noted above, results in a layer of insulation being deposited on the contact surface. Over time, this oxidation will prevent the switch from working completely.

Arcing can also literally weld a hole through a switch, which can also lead to failure of the switch. For most switches, it is not possible to clean the contacts on the switch itself, so once the switch fails, you have little choice but to replace it.

You can test a switch a number of ways. One is to merely jumper out the switch and see if the circuit works using a jumper. If it works, then odds are, the switch is bad. Of course, this assumes you know how to jumper the correct leads and you don't electrocute yourself.

Another is to test the switch with a Volt-Ohm meter, measuring resistance across the switch (removed from the circuit, of course) in the open and closed positions. One problem with this approach is that sometimes a switch may appear to be "working" when the milliamps of current are applied by the VOM, but not work in the actual circuit where it is being asked to switch higher amperage.

And again, the ignition switch on many cars carries a large number of loads and thus may be especially prone to failure over time (Hint: Get in the habit of turning off lights, wipers, heater blower, etc before shutting off a car. When you turn on the ignition switch with these on, you are switching a hefty load through that ignition switch!).

One way to limit the load on switches (and thus make them lighter and cheaper) and also limit wiring loads (and make wiring lighter and cheaper) is to use a power relay to switch power loads. Interior switches in the car thus end up switching the relay, which in turn handles the job of switching the high power load.

Over the years, manufacturers have increased the number of relays used, to reduce weight and reduce the amount of copper in a car. Back in 1960, many a car had nary a relay. Today, even the most pedestrian make has five or six. If the car has a number of identical relays, you can easily test a relay by swapping it with one of its mates. But caution: Not all relays are alike, even those that have the same form factor and shape and plug arrangement. Many are wired differently (normally open versus normally closed) or are rated for different amperages. So before trying this route, be sure you have the right relay (same part number).

Again, you really can't fix a relay (although I did disassemble one in a pinch and was able to clean the contacts with a fine piece of sandpaper). Replacement is really the only solution.

5. Water: This arguably falls under the connector problems listed above, but bears special mention by itself. Water ingress can cause immediate short circuits by itself. But in addition, continued exposure to water can cause corrosion of connectors and other components.

Headlight and taillight assemblies can fill with water and short out. Usually, evidence of such water intrusion is readily apparent and fixing such problems is a matter of sealant (which rarely works) or replacing the assembly (which usually ends up solving the problem). Pay careful attention to gaskets and the like on bulb connectors. Often these are lost when replacing bulbs, allowing for water ingress.

A properly functioning car should be able to drive through water a foot deep or more and have no problems. But playing puddle jumper never is a good idea, and if you can avoid deep puddles and downpours, with an older car, it will probably save a lot of grief.

Also, garaging a car will result in a lot less water ingress over time, which is why, if you can, spend money on buying a house with a garage before you spend money on a fancy car. Garaged cars last longer and run better, period.

Keeping dead leaves and debris out of your underhood area and trunk lid are important. Most cars have a complex series of drain holes and tubes to drain off excess water from around door seals, trunk seals, and hood seals. If these drains become clogged, water will overflow and short out electronics (and get inside your car and give it that wet dog smell and grow a mushroom farm).

BMWs have two drain tubes behind the firewall that, if clogged, may flood the engine management computer, causing this expensive item to short out and die.

Rubber boots and connectors, designed to repel water may end up retaining it, as happened to me with one car. The power leads to the Anti-lock brake system were sheathed in rubber boots. The ABS light went on after every rain storm. After removing these rubber boots, a thimble-full of water fell of each one. Packing these with dielectric grease solved the problem, permanently. ABS sensor connectors suffer from a similar problem and dielectric grease often solves this problem as well.

Flood cars are usually junked out because electrical problems from water ingress can be chronic and difficult to repair. If you end up with such a car, I would suggest attacking every connector below the waterline with an Emory board (to remove corrosion) and dielectric grease (to prevent further corrosion).

Even cars that are not in a flood can have water problems. For example, the previous owner spilled water in the back of my X5. Since the battery and electronics modules are under the spare tire, this resulted in some corrosion of connectors. When installing the trailer hitch wiring harness, I noticed this problem and corrected it - by cleaning the contacts and applying dielectric grease.

6. Sensors: Again, most sensor problems, such as ABS sensors, end up being connector problems. ABS sensors are just coils and rarely "wear out". But many a dealer mechanic has replaced three or more under warranty, when the root cause was a bad connector.

Modern fuel injected engines have a number of sensors that control various aspects of the engine. These may include temperature sensors, mass air flow sensors, throttle position switch, camshaft position sensor, crankshaft position sensor, knock sensors, and the like.

For the most part, you can diagnose failures in these sensors from the OBD II error codes (using a code reader). But note that just because a code reader mentions a part by name does not mean the part in question is in need of replacement.

For example, "oxygen sensor out of range" errors are often caused by intake leaks, such as at the intake elbow. A "catalytic converter efficiency below threshold" error, on the other hand, may indicate a poorly operating oxygen sensor.

Before you run off replacing parts, Google the error code, make and model, and see if someone else had the same problem. Chances are, you may find the solution from those input criteria.

Other types of sensors, such as a throttle position switch, can be tested using a volt-ohm meter. Your service manual will detail which sensors can be tested and how to go about testing them, by measuring resistance or some other parameter.

Sensors can be cheap enough that in some instances, it makes sense to just replace them, if they are at all suspect. I had an old fuel-injected Fiat that I bought secondhand, and never ran right. I realize that replacing all the sensors for the fuel injection system (other than the flow meter, which had already been replaced) would cost about $250. So I just replaced them all and the car ran great after that. But usually, the "throwing parts at it" solution is not a good idea, particularly if the parts are expensive.

Oxygen sensors bear special mention. These are, in a way, like light bulbs, in that eventually they wear out. Most cars have scheduled replacement intervals (50,000 miles, 100,000 miles), and it makes sense to replace these if they are beyond their scheduled replacement interval, particularly if you are having any engine issues at all. Note that age, in addition to mileage, may also wear on these. So even a lower mile car, which is older, may need a new oxygen sensor or sensors. And also, just because the book says they should be replaced at 100,000 miles does not mean they won't fail before then.

7. Actuators: Anything with a moving part is prone to failure, and actuators usually are inclined to be less reliable than sensors. However, since most Engineers know this, actuators tend to go through more testing and analysis and I think tend to last longer. Power window motors and door lock actuators do wear out over time, but not as often as you'd think, given the amount of use they get. Replacing these is not a big issue. When they fail, and you've eliminated the switch, fuse, connectors, and relays from the problem, chances are, it is the actuator.

Electronic fuel pumps bear special mention. Many of these are mounted in the tank and are cooled by the fuel pumping through them. Running a car out of fuel may overheat the pump, which will shut it off or cause it to fail. Also note that many newer cars have impact switches that shut off electronic fuel pumps after an accident, to reduce the likelihood of fire. So before you yank a fuel pump, check to see if there is such a switch and a reset for it.

And again, many diagnosed actuator problems may in fact be connector problems, so check connectors first. But motors eventually wear out, usually because the contact bushes (in a DC motor) wear out and cause the motor to die. Since armature shops are getting harder to find, replacing the motor is usually the only option.

I have had an interesting fan blower problem on two cars, where water ingress causes the blower to stop working. The blower "froze" in position, most likely because the carbon brushes got wet and stuck to the armature. In both cases, opening up the plenum and rotating the fan by hand fixed the problem - at least temporarily. But be careful if the fan is switched on, as it may ding your fingers once it starts up.

7. Wiring: This is usually the last place to look and the first place most amateur mechanics think about. I cannot tell you how many postings I see online where someone with a decade-old car (and decade old car battery) posts a query, wondering why their battery keeps going flat. Their first impulse is "It must be a short somewhere, I'll have to tear into the wiring".

Wires just don’t fail, period. A piece of copper, lying undisturbed, doesn't just suddenly decide not to conduct, or break in half on its own accord.

If a wire does fail, it is likely to be at a door or trunk lid, where wiring flexes over time, causing work hardening, which in turn can lead to brittle failure. But you know what? Automotive Engineers know all about this, and design their wiring harnesses to take such abuse. So even such failures are very, very rare (I've owned a mountain of junkers over the years, and rarely has the door wiring ever failed).

Bulkheads are another area where failure may occur, if a wire rubs against a raw metal opening. But again, Automotive Engineers know this and use rubber grommets and fittings to prevent such problems. Of course, Buddy down at the local car stereo shop may not be so well informed, which is why aftermarket installations often have problems. Inspect such installations carefully to be sure that the wiring is not compromised, and more importantly, that they have not compromised the existing wiring in the car.

A special note on car storage: Be sure to rodent-proof your storage area if you plan on storing a car for a month or more. Hire an exterminator or place rat poison or other devices near or on the car (be sure to remove afterwords!). Mice love to eat the insulation on some cars, and have been known to destroy wiring harnesses, which are costly to replace. Also, in the South, so-called "palmetto bugs" (cockroaches) will eat vinyl insulation with similar results.

The general goal of any electrical system is to minimize the number of connectors and breaks in the system, as each is a source of potential trouble. In this regard, cutting and splicing wires should be avoided. Some folks, to try to save a few dollars, will try to cut and splice a "generic" oxygen sensor into the existing harness. This may result in a savings of maybe $60 per sensor, but involves quite a bit of work, to do the solder job right. And each connection is a potential problem (cold solder joint, water ingress, corrosion) that could make the job go horribly wrong.

Now granted, if no other part is available, then you have no choice. But if you have a plug and play part available for not a lot more money, I don't see the "savings" in going against general Electrical Engineering principles. And usually, it turns out, the fellow soldering his connections to save $60 is the same guy who spend $250 on clear turn signals. Get your priorities straight!

Wiring works great - if left alone. This is one reason why I shy away from any aftermarket products that are not "plug and play". Tearing into the wiring harness of a car to install an optional, an unnecessary accessory is creating a risk of problems. And the message boards are full of sob stories from folks who try to install aftermarket remote starters (or alarm systems or boom-boom stereos) and end up with a car that won't start and now has to be flatbedded to a dealer for repair - expensive repair at that.

Even those cheesy "tap off" electrical fittings can break a wire or cause corrosion to intrude. Unless you have a real compelling need, avoid cutting wiring on your car.

And increasingly, the aftermarket is offering "plug and play" solutions. Aftermarket plug and play alarms are available, even for BMWs, that require no cutting of wires. These are not only easier to install, they are more reliable as well.

And for car stereos, you can buy wiring harnesses in most catalogs which will plug into the factory harness. You can solder and shrink tube this harness to the stereo you buy and then plug in the entire thing into the factory wiring. But before you try even this, ask yourself if it is really worthwhile.

8. Accessories: In this vein, many aftermarket accessories can also cause problems for car owners. People try to "upgrade" their car using Chinese-made junk, and then end up in trouble and upset.

Putting in higher wattage bulbs for headlights for example, may make your lights brighter, but also make them blind oncoming drivers. And yes, they will likely blow a fuse. And as I noted above, replace the fuse with a higher amperage one is not a good idea.

If you want to install non-functional cosmetic modifications like "angel eyes" and the like, knock yourself out. Just do a good job of it, because no one will have much sympathy for you when you post your tale of woe on a message board about how they don't work right. And even if they do work right, bear in mind that everyone is still laughing at you, anyway. Leave that sort of junk to teenagers.

Taillights under glass are another example of a "mod" which causes electrical problems down the road. In BMWs, the resistance of the rear bulbs is measured by the OBC and an error message generated when it is off. LED and other "racey" (ricey) looking aftermarket taillights often set off the OBC and cause a permanent error message to appear on the dashboard. Many of these self-styled boy racers "Fix" the problem by covering over the OBC and/or removing the light bulb from the dashboard display. This sort of thing is jury-rigging at its worst.

The best way to avoid electrical problems with aftermarket accessories is just to avoid aftermarket accessories entirely. They add no value to the car, and in fact, devalue it. People shy away from buying a used car that reeks of boy-racer mods, as it speaks volumes about the maturity of the owner and the way the car was treated. And as I noted above, ironically, the same folks who think nothing of spending thousands of dollars on "mods" often neglect basic maintenance items like fluid changes.

The only upside to these nimrods is that they usually sell their take-off parts for cheap on Craigslist. So if you need a set of new tires or a headlight, chances are, some boy-racer will sell you them for cheap, as he "upgrades" to badly made Chinese replacements. His loss, your gain. 18-year-olds were born to be taken advantage of.

* * * *

So there you have it. Solving electrical problems is not that hard, if you take a systematic approach, investigating the high-probability failure items first, before you attack the least-likely failure items. And shying away from creating problems is also part of the deal as well.

The best general advice I can offer anyone is to clean connectors and apply dielectric grease. It will prevent a whole host of electrical problems, and fix many electrical problems that are incorrectly diagnosed as component error.